Scholars@Duke
Pietro F. Peretto

Pietro F. Peretto

Professor of Economics
Economics
peretto@econ.duke.edu
Box 90097, Durham, NC 27708-0097
241 Social Sciences, Box 90097, Durham, NC 27708

Selected Publications

Business taxes, management delegation, and growth

Journal Article European Economic Review · November 1, 2024 We examine the interaction between agency issues and business taxation in a growth model with an endogenous market structure. Agency issues arise from two types of management delegation: day-to-day production and research and development (R&D) activities. ... Full text Cite

Political fragmentation versus a unified empire in a Malthusian economy

Journal Article Journal of Economic Behavior and Organization · June 1, 2024 What are the historical origins of political fragmentation and unification? This study develops a Malthusian growth model with multiple states to explore interstate competition and the endogenous emergence of political fragmentation versus a unified empire ... Full text Cite

Export-led takeoff in a Schumpeterian economy

Journal Article Journal of International Economics · November 1, 2023 This study develops an open-economy Schumpeterian growth model with endogenous takeoff to explore the effects of exports on the transition of an economy from stagnation to innovation-driven growth. We find that a higher export demand raises the level of em ... Full text Cite

Innovation and inequality from stagnation to growth

Journal Article European Economic Review · November 1, 2023 This study explores the evolution of income inequality in an economy featuring an endogenous transition from stagnation to growth. We incorporate heterogeneous households in a Schumpeterian model of endogenous takeoff. In the pre-industrial era, the econom ... Full text Cite

LABOUR TAXES, MARKET SIZE AND PRODUCTIVITY GROWTH

Journal Article Economic Journal · August 1, 2023 How do changes in labour taxes affect innovation and aggregate productivity growth? To answer this question, we propose a quantitative, general equilibrium growth model featuring product and quality innovation with endogenous market structure, estimate its ... Full text Cite

Agricultural revolution and industrialization

Journal Article Journal of Development Economics · September 1, 2022 This study explores how agricultural technology affects the endogenous takeoff of an economy in the Schumpeterian growth model. Due to the subsistence requirement for agricultural consumption, an improvement in agricultural technology reallocates labor fro ... Full text Cite

Corporate governance and industrialization

Journal Article European Economic Review · June 1, 2021 Corporate governance distortions delay or even halt a country's transformation into a modern innovation economy. We investigate the mechanism through a growth model that allows for agency issues within firms. Governance distortions raise the cost of invest ... Full text Cite

Dynamic effects of patent policy on innovation and inequality in a Schumpeterian economy

Journal Article Economic Theory · June 1, 2021 This study explores the dynamic effects of patent policy on innovation and income inequality in a Schumpeterian growth model with endogenous market structure and heterogeneous households. We find that strengthening patent protection has a positive effect o ... Full text Cite

Through scarcity to prosperity: Toward a theory of sustainable growth

Journal Article Journal of Monetary Economics · January 1, 2021 To make progress toward a comprehensive theory of sustainable growth, this paper integrates fertility choice and exhaustible resource dynamics in a tractable model of endogenous technological change. The model identifies conditions under which the interdep ... Full text Cite

Wealth creation, wealth dilution and demography

Journal Article Journal of Monetary Economics · January 1, 2021 Demographic forces are crucial drivers of macroeconomic performance. Yet, existing theories do not allow demography to respond to fundamentals and policies while determining key macroeconomic variables. We build a model of endogenous interactions between f ... Full text Cite

Implications of tax policy for innovation and aggregate productivity growth

Journal Article European Economic Review · November 1, 2020 We examine the quantitative implications of income taxation for innovation and aggregate productivity growth within the context of a dynamic stochastic general equilibrium model of innovation-led growth. In the model, innovation comes from entrants creatin ... Full text Cite

The cumulative cost of regulations

Journal Article Review of Economic Dynamics · October 1, 2020 We estimate the effects of federal regulation on the value added to GDP for a panel of 22 industries in the United States over a period of 35 years (1977–2012). The structure of our linear specification is explicitly derived from the closed-form solutions ... Full text Cite

More apples vs. better apples: Distribution and innovation-driven growth

Journal Article Journal of Economic Theory · January 1, 2020 We model distribution, the delivery of goods to customers, as an activity governed by its own technology and undertaken by firms subsequently to production. We then use the model to investigate how distribution shapes innovation-driven economic growth. We ... Full text Cite

Innovation-led growth in a time of debt

Journal Article European Economic Review · January 1, 2020 We study the effects of large reductions in government budget deficits (labeled “fiscal consolidations”) on firms’ entry, innovative investments, productivity and per capita output growth in a model of endogenous technological change. Due to the absence of ... Full text Cite

Commodity Prices and Growth

Journal Article Economic Journal · December 1, 2018 In this article, we propose an endogenous growth model of commodity-rich economies in which: (i) long-run (steady-state) growth is endogenous and yet independent of commodity prices; (ii) commodity prices affect short-run growth through transitional dynami ... Full text Cite

Robust endogenous growth

Journal Article European Economic Review · September 1, 2018 This paper studies a generalization of the Schumpeterian models with endogenous market structure that allows the overall production structure to be more than linear in the growth-driving factor and yet generates endogenous growth, defined as steady-state, ... Full text Cite

Endogenous Growth and Property Rights over Renewable Resources

Scholarly Edition · 2015 We study how different regimes of access rights to renewable natural resources – namely open access versus full property rights – affect sustainability, growth and welfare in the context of modern endogenous growth theory. Resource exhaustion may occur und ... Cite

Financial Markets, Industry Dynamics, and Growth

Journal Article Economic Research Initiatives at Duke (ERID) · August 27, 2014 We study the impact of corporate governance frictions in an economy where growth is driven both by the foundation of new firms and by the in-house investment of incumbent firms. Firms' managers engage in tunneling and empire building activities. Active sha ... Cite

Credit quantity and credit quality: Bank competition and capital accumulation

Journal Article Journal of Economic Theory · May 1, 2012 In this paper we show that bank competition has an intrinsically ambiguous impact on capital accumulation. We further show that it is also responsible for the emergence of development traps in economies that otherwise would be characterized by unique equil ... Full text Cite

Market Power, Unemployment, and Growth

Chapter · 2012 I present a model where firms and workers set wages above the market-clearing level. Unemployment is thus generated by their exercise of market power. Because both the labor and product markets are imperfectly competitive, market power in the labor market ... Full text Link to item Cite

Resource abundance, growth and welfare: A Schumpeterian perspective

Journal Article Journal of Development Economics · January 1, 2012 This paper takes a new look at the long-run implications of resource abundance. It develops a Schumpeterian model of endogenous growth that incorporates an upstream resource-intensive sector and yields an analytical solution for the transition path. It the ... Full text Cite

The Growth and Welfare Effects of Deficit-Financed Dividend Tax Cuts

Journal Article Journal of Money, Credit and Banking · August 1, 2011 I develop a tractable growth model that allows me to study analytically transition dynamics and welfare in response to a deficit-financed cut of the tax rate on distributed dividends. I then carry out a quantitative assessment of the Job Growth and Taxpaye ... Full text Cite

Growth on a Finite Planet: Resources, Technology and Population in the Long Run

Scholarly Edition · June 30, 2011 We study the interactions between technological change, resource scarcity and population dynamics in a Schumpeterian model with endogenous fertility. There exists a pseudo-Malthusian equilibrium in which population is constant and income grows exponentiall ... Cite

Resources, innovation and growth in the global economy

Journal Article Journal of Monetary Economics · May 1, 2011 The relative performance of open economies is analyzed in an endogenous growth model with asymmetric trade. A resource-rich country trades resource-based intermediates for final goods produced by a resource-poor economy. The effects of an increase in the r ... Full text Cite

Market power, growth, and unemployment

Scholarly Edition · January 1, 2011 I present a model where firms and workers set wages above the marketclearing level. Unemployment is thus generated by their exercise of market power. Because both the labor and product markets are imperfectly competitive, market power in the labor market i ... Full text Cite

Sustaining the goose that lays the golden egg: A continuous treatment of technological transfer

Journal Article Scottish Journal of Political Economy · November 23, 2009 This paper proposes a simple model of the trade-offs perceived by innovating firms when investing in countries with limited intellectual property rights (IPR). The model allows for a continuous treatment of technology transfer and production cost gains occ ... Full text Cite

Energy taxes and endogenous technological change

Journal Article Journal of Environmental Economics and Management · May 1, 2009 This paper studies the effects of a tax on energy use in a growth model where market structure is endogenous and jointly determined with the rate of technological change. Because this economy does not exhibit the scale effect (a positive relation between T ... Full text Cite

Effluent taxes, market structure, and the rate and direction of endogenous technological change

Journal Article Environmental and Resource Economics · February 1, 2008 This paper studies the effects of effluent taxes on firms' allocation of resources to cost-reducing and emission-reducing R&D, and on entrepreneurs' decisions to develop new goods and enter the market. A tax set at an exogenous rate that does not depend on ... Full text Cite

The Manhattan metaphor

Journal Article Journal of Economic Growth · December 1, 2007 Fixed operating costs draw a sharp distinction between endogenous growth based on horizontal and vertical innovation: a larger number of product lines puts pressure on an economy's resources; greater productivity of existing product lines does not. Consequ ... Full text Cite

Corporate taxes, growth and welfare in a Schumpeterian economy

Journal Article Journal of Economic Theory · November 1, 2007 I take a new look at the long-run implications of taxation through the lens of modern Schumpeterian growth theory. I focus on the latest vintage of models that sterilize the scale effect through a process of product proliferation that fragments the aggrega ... Full text Open Access Cite

Schumpeterian growth with productive public spending and distortionary taxation

Journal Article Review of Development Economics · November 1, 2007 Schumpeterian growth theory eliminates the scale effect by positing a process of development of new product lines that fragments the aggregate market in submarkets whose size does not increase with population or the size of the workforce. This entails the ... Full text Cite

Scale effects in endogenous growth theory: An error of aggregation not specification

Journal Article Journal of Economic Growth · September 1, 2006 Modern Schumpeterian growth theory focuses on the product line as the main locus of innovation and exploits endogenous product proliferation to sterilize the scale effect. The empirical core of this theory consists of two claims: (i) growth depends on aver ... Full text Cite

Fiscal policy and long-run growth in R&D-based models with endogenous market structure

Journal Article Journal of Economic Growth · September 1, 2003 This paper shows that in a model of endogenous growth that does not exhibit the scale effect, taxes on consumption and labor income and the level and composition of public expenditure have no effect on steady-state growth. The only fiscal instruments that ... Full text Cite

Industry and the family: Two engines of growth

Journal Article Journal of Economic Growth · March 1, 2003 We generalize the class of endogenous growth models in which the scale of the economy has level rather than growth effects, and study the implications of different demographic and technological factors when both fertility choice and research effort are end ... Full text Cite

Endogenous market structure and the growth and welfare effects of economic integration

Journal Article Journal of International Economics · January 1, 2003 This paper studies the growth and welfare effects of integration in a world economy populated by global oligopolists. In economies that move from autarky to trade, growth and welfare rise because exit of domestic firms is more than compensated by entry of ... Full text Open Access Cite

Technological distance, growth and scale effects

Journal Article Economic Journal · January 1, 2002 We present an endogenous growth model in which the scale effect may be positive or negative but vanishes asymptotically. The mechanism behind this result provides a microfoundation for models that exploit the interaction of growth and market structure to r ... Full text Cite

Firm size, rivalry and the extent of the market in endogenous technological change

Journal Article European Economic Review · October 1, 1999 Evidence shows that firms build their market position by accumulating knowledge protected by secrecy, patents and other appropriation devices. I explore the implications of this fact in a model economy where oligopolistic firms establish in-house R and D p ... Full text Cite

Industrial development, technological change, and long-run growth

Journal Article Journal of Development Economics · August 1, 1999 To account for the qualitative differences between developed and developing countries, this paper argues that the expensive in-house R and D that manufacturing firms undertake in advanced industrial economies cannot be supported in countries that are in th ... Full text Cite

Cost reduction, entry, and the interdependence of market structure and economic growth

Journal Article Journal of Monetary Economics · February 19, 1999 I study the joint determination of market structure and growth in an oligopolistic economy. Firms run in-house R&D programs to produce over time a continuous flow of cost-reducing innovations. In symmetric equilibrium, the relation between market structure ... Full text Open Access Cite

Variety, Spillovers and Market Structure in a Model of Endogenous Technological Change

Chapter · 1998 Growth theorists have produced a number of interesting models investigating the idea that technological progress, the engine of growth in income per capita, is endogenous to the economic system and driven by market forces. These models are radically differ ... Full text Link to item Cite

Technological change, market rivalry, and the evolution of the capitalist engine of growth

Journal Article Journal of Economic Growth · January 1, 1998 In the early stages of Western industrialization, innovation was the domain of individuals who devoted their entrepreneurial talents to the development of a new product or process, typically setting up a new firm in order to take the innovation to the mark ... Full text Cite

Technological change and population growth

Journal Article Journal of Economic Growth · January 1, 1998 What is the relationship between the rate of population growth and the rate of technological change? To answer this question, I discuss a model where increasing returns generate long-run growth but where the scale effect is absent. More precisely, the mode ... Full text Cite

Persistence of innovative activities, sectoral patterns of innovation and international technological specialization

Journal Article International Journal of Industrial Organization · January 1, 1997 In this paper, we focus on the role of persistence and heterogeneity of innovative activities at the level of the firm in determining the patterns of technological change in different industries and countries. We ask: are persistence and heterogeneity asso ... Full text Cite

Sunk costs, market structure, and growth

Journal Article International Economic Review · January 1, 1996 I present a model of endogenous innovation where firms undertake in-house research and development (R&D). The concentration of sales and R&D resources determines the scale and efficiency of R&D operations and rate of productivity growth. In zero-profit equ ... Full text Cite

Sources, Appropriability and Directions of Technological Change: USA and Italy

Journal Article Banca Nazionale del Lavoro Quarterly Review · June 1993 Cite